Buried on page 643 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a brief paragraph listed under “Procurement” for the Department of Defense. Stating “For an additional amount for ‘Defense Production Act Purchases,’ $1,000,000,000, to remain available until expended, to prevent, prepare for, and respond to [the] coronavirus,” this section got the analysts here at Federal Market Analysis wondering why special funding under the Defense Production Act (DPA) is necessary. After all, federal agencies, including the DOD, just received tens of billions of dollars in emergency appropriations to respond to the public health crisis posed by the novel coronavirus. Couldn’t the agencies with emergency authority granted by the DPA simply spend those emergency funds via expedited contract processes using either existing contracts or by rapidly awarding new contracts?

The answer is yes and no.

All of the agencies with emergency authority (such as DOD, Health and Human Services, Homeland Security, etc.) may spend on requirements related to COVID-19 mitigation and response through normal procurement channels, but the original Defense Production Act of 1950 also established a special DPA Fund at the U.S. Treasury for which Congress appropriates funds each budget year. Page 276 of the President’s Budget request for fiscal year 2021 reveals, for example, that in FY 2019 the DPA Fund received $86M. This number fell to $64M in FY 2020, but is slated to rise to $182M in FY 2021. Now, with the addition of $1B, the DPA Fund total rises to an estimated $1.06B, with those funds being available for as long as they are required. Section 304 of the original 1950 statute had stipulated that no more than $750M could remain in the DPA Fund at the end of each fiscal year, but that limit has been lifted.

Tracking how dollars appropriated to the DPA Fund get spent is another matter. A number of blog posts authored by FMA (see here, here, and here) have documented the subject of Rated Orders, with agencies like HHS and the Army Corps of Engineers undoubtedly already using these. The DOD as a whole is harder to understand because of the 90-day delay in the public release of its spending data. When that data is available, and it is related to the DPA, it appears in USASpending under Treasury Account Number 097-0360, which is the number designated for it in the President’s FY 2021 Budget.

A search of USASpending Federal Account Profiles using #097-0360 reveals that as of Q1 FY 2020, the DPA Fund had an unobligated balance of $223.8M thanks to the carry-over of $227.2M from the previous fiscal year. These numbers clearly contradict what is listed in the FY 2021 Budget Request, but who’s counting? That said, assuming the numbers listed on USASpending are more accurate than the budget documentation it means that the DPA Fund currently contains $1.22B in available funding.

Once the final numbers for Q2 are received an updated total for DOD spending under the DPA Fund should become available. Federal Market Analysis will provide updated information as it becomes available. The USASpending page also lists the contracts under which DPA awards were made, so our understanding of DPA Fund spending should grow more detailed over time.